It is natural to view retirement preparation as strictly an exercise
in asset accumulation. Most people narrowly focus their efforts on
building a nest egg large enough to fund the retirement they desire.
For those who begin planning early in life and who are persistent
enough to be able to stay on track over time, accumulating the
necessary funds for their ideal retirement may be entirely realistic. But
for the many people who approach retirement well behind, there’s little
comfort to be found in some unreachable asset accumulation target.
Changing your retirement perspective
So what can you do at this stage of the game? First, acknowledge that
your original target–if you ever had one–is out of reach. Second, realize
that a financially successful retirement isn’t about some magic number
nearly so much as the relationship of your income to your expenses.
This changes your perspective. You begin to focus less on assets
and more on income and expenses. There is more that can be done
late in the retirement planning process to maximize income and control
expenses than to accelerate asset accumulation.
Maximizing income
One way you may be able to increase your net income in retirement is
by moving money from your traditional IRAs to Roth IRAs. This will likely
be a taxable transaction. But by paying the taxes now, while you’re
working and can better afford it, you can ensure that you will be able to
withdraw the money tax-free in retirement.
Another attractive way to increase your retirement income is by waiting
longer to claim your Social Security benefits. If long life spans run in your
family, it may be worth waiting. Of course, if you can’t afford to retire
without Social Security, waiting to claim it will mean working longer.
Reducing expenses
One of the best and most obvious ways to reduce retirement expenses
is by paying off your mortgage before you retire. It’s common for people
to build the most expensive house they’ve ever owned when they retire.
That’s fine if you can comfortably afford it, but if you’re playing catchup,
it might make more sense to eliminate a mortgage payment that
likely will eat up 25 or 30 percent of your monthly income.
Another common-sense method for those not concerned about
estate taxes to consider for reducing expenses is spending the money
in your taxable investment accounts first. By spending the money in
your non-retirement accounts first, you can minimize your total tax
bill, allowing retirement accounts to continue to compound on a taxdeferred
Real Hero Report |
basis.
Your Advisor can help
Starting to get the idea? There are viable strategies for maximizing
your income and controlling your expenses in retirement. So, if you’re
nearing retirement and don’t feel entirely confident that you’re on track,
don’t spend a lot of time fretting over some online calculator. Sit down
with your financial advisor and discuss what steps you can take to
stretch your resources and get the most out of your retirement.
H
value based on what the home will be worth once the repairs
where home
inventory is low, this
will be especially
veterans take homes
and turn them into
being that the VA recently changed its stance on VA cash-out
equity in their home as opposed to taking out 100%. This
unique loan allows veterans to extract the maximum equity out
homes, or remain in the current homes and upgrade or repair
Gianni Cerretani with Homebridge Financial Services, a VA loan
A Fresh Perspective on
Retirement
VA Renovation Lending